[Cuba] Fivefold minimum wage increase among economic reforms

According to reporting from the official gazette on December 11, Cuba will implement a fivefold minimum wage increase as part of reforms due to come into effect on January 1 as the country unifies its two official currencies. France 24 covers the story.

Prior to President Miguel Diaz-Canel’s Thursday night announcement, the large-scale reform of salaries and pensions had been a promise of many years standing. Under it, the minimum wage will increase from 400 to 2,100 pesos ($17 to $87.)

The reform will also see the convertible peso - which is pinned to the dollar following its introduction in 1994 to replace the US currency - phased out over the next six months. The only remaining currency will be the regular peso, worth 24 times less.

The intention behind the change is to make the Cuban economy more efficient and easier for foreign investors to understand. The reforms come during a period when the country is reeling from toughened sanctions imposed by the Trump administration and from the drop in tourism and remittances the COVID-19 pandemic has caused.

In a resolution published in the official gazette, the labour ministry said that inflation is expected to soar so "it's necessary to establish a minimum salary in the country that guarantees the satisfaction of basic necessities for the worker and his family, as well as the scale of salaries applicable to all workers."

In addition to the new minimum wage, there will be 32 pay scales created based on the type of work, ranging to a maximum of 9,510 pesos. According to the national statistics office, the average wage is currently just 879 pesos.

The new measures - first announced in 2013 before repeated delays - come at a delicate time for the Cuban economy. It is expected to shrink by eight per cent this year.

According to reporting from the official gazette on December 11, Cuba will implement a fivefold minimum wage increase as part of reforms due to come into effect on January 1 as the country unifies its two official currencies. France 24 covers the story.

Prior to President Miguel Diaz-Canel’s Thursday night announcement, the large-scale reform of salaries and pensions had been a promise of many years standing. Under it, the minimum wage will increase from 400 to 2,100 pesos ($17 to $87.)

The reform will also see the convertible peso - which is pinned to the dollar following its introduction in 1994 to replace the US currency - phased out over the next six months. The only remaining currency will be the regular peso, worth 24 times less.

The intention behind the change is to make the Cuban economy more efficient and easier for foreign investors to understand. The reforms come during a period when the country is reeling from toughened sanctions imposed by the Trump administration and from the drop in tourism and remittances the COVID-19 pandemic has caused.

In a resolution published in the official gazette, the labour ministry said that inflation is expected to soar so "it's necessary to establish a minimum salary in the country that guarantees the satisfaction of basic necessities for the worker and his family, as well as the scale of salaries applicable to all workers."

In addition to the new minimum wage, there will be 32 pay scales created based on the type of work, ranging to a maximum of 9,510 pesos. According to the national statistics office, the average wage is currently just 879 pesos.

The new measures - first announced in 2013 before repeated delays - come at a delicate time for the Cuban economy. It is expected to shrink by eight per cent this year.